Looking for advice if we should get a IVA

Jock121

We are thinking about an IVA. I am 16k in debit in Credit Cards and Over Drafts, I have a car loan £189pm that has 3 years to go and I have a mortgage. I have so far made every payment so still have a 'good' credit rating. I can't get a loan to cover all the Debit as I earn just under the 10k required. All the Debit is in my name as my OH has no credit rating due to being self employed n using cash. I am worried as some of the 0% deals finish in April and there's not many left I can transfer too and I'm not sure we could afford it all anymore. Any advice would be welcome please. TIA

UpToMyNeckInIt

Difficult to advise without knowing your exact circumstances.

You are right to thoroughly research the subject of IVAs. Please consider the ramifications before entering an IVA - speak to a few providers to see if it is the right option for you. Remember: It is a form of insolvency, which in turn puts all sorts of restrictions on everything from the ability to open a bank account, or even get a mobile phone on contract.

I only went down the IVA route as I had no real option after an unexpected change in financial circumstances.

However, I'm glad I went the IVA route in the end - can now sleep at night, Hope you get back on track financially soon as well.

However, I think with your level of debt, a Debt Managment Plan might be worthy of consideration.

You are quite right to worry about the end of your 0% deals. If my experience was anything to go by, they don't just revert back to the standard APR, but they then increase it considerably, 'cos they know they've got you by the vitals.

Is your car loan merely a personal loan, or actual car finance? What's the car worth? This is important, as you may be forced to downgrade your car to something worth less than, say £5k. Also your car finance company may repossess the vehicle. These are the specifics you will need to discuss with an insolvency practitioner.

I'm sure you already have, but: Have you thought about selling the car, downsizing, and reducing your debt to a more manageable level?

If you still feel an IVA is the way to go, then in my opinion, speaking as an IVA customer:

Initially seek advice from the ‘charity’ organisations, but don’t be afraid to approach a private firm if they don't think you are eligible for an IVA. (Also, there is also no obligation to go with their nominated company - often that's Grant Thornton).

Google ‘insolvency practitioner reviews’ and contact a couple of well-reviewed Insolvency Practitioners. Contrary to what some might have you believe, many don't charge you anything, and their fees would be paid out of your monthly IVA payment (and agreed by your creditors).

The following link to Stepchange, gives a brief ‘iva pros & cons’ guide though which is a useful starting point:

http://www.stepchange.org/Debtinform...osandcons.aspx

Google ‘Straightforward Consumer IVA protocol’ which the vast majority of new IVAs are compliant with, much of which will form the basis, word-for-word of you IVA agreement. This should direct you to a link to download the pdf document. Well worth a read.

Similarly, you will have to work out your income and expenditure. Whatever is left over is your IVA payment. Regarding what is deemed 'reasonable' expenditure, google: ‘CCCS Budget Guidelines Report 2011’. All IPs that I’ve come across make reference to this. Download the pdf. (There is a newer version, but I cannot find a link to download it).

However, even if the figures are a little off, it is well worth a read, as it covers every form of expenditure, right the way down to allowances for hairdressing, kid's school dinners, meals at work, even hobbies etc if so required.

If you are careful to correctly record your income and expenditure, your IVA payment should be set at quite an affordable level. I have come across people who underestimate their expenditure (in the mistaken belief that their IVA will more likely be accepted), and subsequently have difficulty from day one.

Equity release: Bear in mind that, however unlikely it is currently likely to happen, IVA's require homeowners to (subject to a property valuation in Month 54 of the IVA), attempt to release equity via remortgage (or possibly secured loan) up to 85% LTV to increase creditor dividend up to 100p in the £. (Subject to the resulting payment being max. 50% of you current IVA payment for affordability reasons). Currently, equity release is almost impossible for IVA customers, so your IVA goes on for a 6th Year instead (which usually works out a lot cheaper). But who knows what the economic climate will be like in 4-5 Years time?

Bank Accounts: If you still are in the pre-approval stage, and any of your debts are with your existing bank, you need to open a full current account with a non-creditor institution now! (less overdraft of course). Best not to reveal that you are considering an IVA though (no requirement to volunteer such information).

Important to do this before you are on the insolvency register, as you will then probably be limited to a handful of basic accounts.

DO NOT switch to HSBC/First Direct: when they find you on the insolvency register, (which they will), they will make you close your account.

Most IP's reckon on a 96-99% IVA-acceptance rate. After all they don't want to go to the time/effort in putting together an IVA proposal, unless they are reasonably certain of creditor approval (they don't get paid otherwise).

Enough for starters!!!

Best of luck in sorting yourself out. The important thing is that you realise that you need to act soon.

Let us know how you get on.

Foxy-Stoat_3

Do you know your monthly living expenses excluding all the debt?

How much is left after your nett salary?

Are you buying stuff other than essentials, or going out, drink/smoking habits?

Would you be able to live cheaper if you cut out luxuries?

Baring in mind that sky, drink, going out, nice tv's and clothes shopping aren't essential.

Are you still using your cards for day to day living, food, fuel, going out, buying clothes, car repairs etc?

Are you using some form of budget, monthly spreadsheet listing out all your out goings and additional expenses?

Are you up to your limits on your credit cards, and how much equity do you have in your house?

IVA's last 5 years but will effect you for probably 7-10 years from the start, if your not budgeting now or living within your means, you will do after one. Its a very long road but you will feel like a massive weight will be lifted from your shoulders and you may even end up sleeping at night !!

rabbit_burrow

Think really carefully about it. I mean really really carefully.

If you can manage by cutting down on any luxuries (mobile phone, sky, going out) if you have them, then go down that avenue first.

An IVA affects a lot of things. I couldn't even get a mobile contract for £10 per month. Yes, really.

You will also appear on the insolvency register, which can be viewed by anyone who has access to the Internet, which details your name and address. Very embarrassing. You stay on this register until 3 months after completion, not 3 months after your last payment, but after your Insolvency Practitioner pulls their finger out and completes it officially. My IVA ended 4 months ago, and I'm still waiting for the completion certificate so I will be on the register until, most likely, the end of this year (nearly 7 years from the start).

It is not an easy option, but it really does help if you have no other choice.